Apc Technology Share Discussion Threads

[glasshalfull] 30/4/2019 07:43

Nice t/s from APC peer SOLI just out



“Year-on-year Group revenue is expected to be ahead of expectations at circa £56 million, representing growth of over 20% on a reported basis (2018: £46.3m) and reflecting close to 10% organic growth (excluding the Pacer Technologies Ltd ("Pacer") acquisition). The Group benefitted from particularly strong Value Added Distribution sales in Q4.“

Well, here’s hoping SOLI’s experience with strong sales in Value Added Distribution has also been experienced by APC. When I last looked SOLI were on a prospective PER of 13 vs. APC on a PER of 9.

Kind regards,
GHF

[playful] 29/4/2019 10:04

Excellent summary from GHF and very helpful in shining a light on such hidden gems here on AIM.

[glasshalfull] 29/4/2019 09:42

Good morning folks,

I’m currently writing up the constituents of my (fantasy football) portfolio & now getting round to my marauding full back...APC!

The table below doesn’t copy over v well from Twitter so here is a direct link


I’ve shared my views extensively on this investment thread, so the write-up should be viewed as a brief resume of the investment case IMHO. Nothing more.

(#3) APC (APC Technology Group) - Exciting Growth

* Share Price 6.6p
* M/Cap £12.1m
* Enterprise Value £15.1m (£2.3m drawn under an invoice discounting facility of £6m)
* Shares in Issue 182.6m
* Stock Rank (Neutral) 37 (Quality 6 / Value 72 / Momentum 55)

Background

APC Technology was established in 1982 & listed in 1996. The share price reached the heady heights of 68p in November 2013 but came unstuck in 2015 as it attempted to diversify. The shares plummeted to a low of 5.7p in June 2017 following series of placings to shore up the company. However, a new management team arrived a couple of years ago & administered considerable mouth to mouth resuscitation, stemmed losses by disposing of a loss making business, restructured & slashed costs by over £2m on an annualised basis. This took the company out of intensive care & they are now executing on their strategy to drive growth.

This has been evidenced with a return to profitability in FY17, then in FY18 further improvement in Revenue, PBT & Op Margins ⬆️ to deliver 0.54p EPS that equates to earnings growth of +100%. Not too shabby! Despite this positive progress the share price has been range-bound for almost a year. Perhaps the market are simply, “once bitten, twice shy” when it comes to APC & are looking for confirmation they can deliver consistently? 🤔

What do APC do?

Well they design-in & distribute high reliability, durable & long lifespan components & systems for critical applications. We are talking product lines where the end-use equipment is operating in extreme conditions or is running applications where component failure would be catastrophic in industries such as Space, Defence & Healthcare. They operate in 3 main areas :-

* Components (60% of sales)they engage with their UK customer base to design-in products sourced & supplied throughout the world into a range of industries which includes military, aerospace, medical & energy. They have also expanded their product portfolio to take advantage of the growing UK space industry which is forecast to grow from £14bn in 2015 to £40bn in 2030.

* Property Technology (30% of sales) is growing organically at +10% per annum & includes project based LED lighting solutions for many of the major Facility Management (FM) companies plus the emerging Internet of Things (IoT) tech for smart buildings solutions for buildings such as The Shard & across Network Rail properties

* Time Synchronisation (10% of sales) is growing organically at +30% per annum. APC Time is being developed as the “go to” brand in the UK as evidenced by their work in a number of areas such as the financial sector & in media with the BBC who have chosen their tech across their iP infrastructure upgrades

How will APC grow?

There are 3 core elements to their growth strategy:-

(1) Sell more of the tech they have - sales team reorganised & incentivised
(2) Sign & sell new complementary tech
(3) Bolt-on acquisitions - acquired 3 complementary businesses during 2018

Management have nailed their colours to the mast & declared targets to TRIPLE the size of the company on a 3-5 year view. They indicate the group will be delivering £48m revenue in 3yrs & in 5yrs up to £75m. With improving op margins I’d hope they’d be delivering PBT of at least £4m & £7m respectively in this timeframe.

Stockdale have a 12p price target or +80% upside on the current share price. The undernoted forecasts indicate +35% EPS growth this year.

Yr end Aug Revenue Adj PBT EPS Normalised

2017 £15.56m £418k 0.27p
2018 £17.15m £683k (+63%) 0.54p (+100%)
2019e £23.06m £1.63m (+23%) 0.74p (+35%)
2020e £24.99m £1.88m (+50%) 0.86p (+16%)
2021e £26.16m £1.96m (+22%) 0.89p (+4%)

In conclusion I don't think it fanciful to believe that APC will NOT ONLY deliver +35% earnings growth this year BUT also the strong possibility that we’ll observe future forecasts being upgraded as each component of their growth strategy becomes a reality. We have already witnessed a significant earnings upgrade for the company with the current FY2019e being upgraded by +30% in July 2018 from 0.57p EPS to 0.74p EPS following the acquisition of Aspen Electronics.

The share price is only on a prospective PER of 8.9 for the current year which falls to a PER of 7.7 in the following year. It looks v good value IMHO.

Disclosure : I hold > 1% equity

Kind regards,
GHF

[pj 1] 17/4/2019 19:57

Probably not! But it's so far all normal price action chart wise where a base is being formed. Off course that needs to be supported by profitable growth, free cash flow at some point a continuing improving Balance sheet.

[seasidehippo] 17/4/2019 14:10

Nice volume today, i'm sure there were more buys than my 88,262 top up!

[playful] 13/4/2019 22:56

We have tremendous support!

[diku] 11/4/2019 21:54

Any reason why the spread has widened so much...

[fordmccomb] 11/4/2019 10:23

An operations director would be a very sensible appointment as the current board seems to be underweight. If RH is concentrating on FD responsibilities, plus overall CEO duties, then an operations director could be considered a critical appointment to drive the integration of the core APC business and the 3 acquisitions.

[cheshire man] 10/4/2019 11:10

Thanks for the update GHF,,,,,,,,and we have a little tick up :-)

[diku] 10/4/2019 08:30

If the current CEO was formerly the FD and if (a big if)there was a conflict of interests then surely they are not going to tell you all...both parties want to look good on their current roles and future roles...

[seasidehippo] 09/4/2019 22:03

Many thanks GHF I much appreciate the information you provide.I too added 54769 in the new tax year. While I share your view regarding RH I do hope an announcement is made soon regarding a new FD

[playful] 09/4/2019 18:06

New market opportunities for our APC Time division...

[glasshalfull] 09/4/2019 18:03

Hi seasidehippo - still my favourite name on the investment boards!!

(See post 1193)
APC - FD’s departure

Good morning,

I’ve grabbed a quick word with the APC team & came away reassured that there is nothing untoward surrounding Michael’s departure. It was simply put to me as a parting of the waves without any acrimony. They were at pains to confirm absolutely nothing else to be read into the change as today’s RNS implies & that Michael leaves with their best wishes for his future endeavours.

During my call I was delighted to learn that the APC management are very pleased with trading in H1. They have alluded to a positive start to FY19 in 4 updates so far in FY19 (2 during Dec 18; 1 in Jan 19 & of course the AGM statement last month) & there was nothing during my call that indicated there had been any change to this positive start. Indeed one of quotes I’ve taken away from the call was that, “the business is in great shape!”

I posted twice last month in relation to my impression of the business following the AGM (posts 1163 & 1175). As a reminder, APC grew earnings by +59% last year & are forecast to grow EPS by a further +34% this year, leaving the shares on a single digit PER.

Hope this assists & saves any investors from being unduly worried over todays Board change. I’m certainly not 👍🏻

Kind regards,
GHF

-

Further to my earlier post, I believe the board were reviewing whether to proceed with an internal appointment/ promotion & perhaps instead look for an Operations Director given the additional sales lines following the 3 x acquisitions in the last 15 months. Makes sense at this time in their evolution & interested to see if they decide to proceed in this manner.

Richard Hodgson, CEO was formerly the FD of the APC previously, so I’ve no worries on this score.

As an aside...I reorganised my portfolio prior to the end of tax year. Today’s 200k BUY was mine. Adding to my position in the current tax year. No net change.

Kind regards,
GHF

[seasidehippo] 09/4/2019 17:19

Unfortunately it does not state in the RNS whether or not they are seeking a replacement Finance Director. IMO silence on this important subject is not aiding the share price Does anyone have any further information on the subject?

[fordmccomb] 09/4/2019 14:47

Interesting opening statement in the FD Departure RNS which read, "Following the successful completion of the Group's turnaround..."
Whilst the majority of the market indices have shown steady growth since the start of 2019, APC shares have basically continued their long term "flat line" at around 6.5p. Therefore any "successful turnaround" as far as shareholders are concerned has yet to start. Lets hope a new FD, plus perhaps someone who can really make these recent acquisitions work, can be found soon.

[mr doughnut1] 07/4/2019 16:31

Thanks for that seasidehippo, will update calendar accordingly.

[seasidehippo] 05/4/2019 17:09

Interim results "expected 21 May 2019" as per recent RNS

[cheshire man] 05/4/2019 15:00

Sounds very positive newsflow atm so lets see if we get a run up those interims :-)

[mr doughnut1] 05/4/2019 14:37

Have Tues the 16th of April pencilled in for the interims?

[playful] 03/4/2019 14:53

Another successful LED project completed this month by APC Lighting at Spitalfields Market...

[seasidehippo] 22/3/2019 16:29

Many thanks GHF much appreciated

[glasshalfull] 22/3/2019 16:12

Seasidehippo

Re today's RNS. Does anybody have any clues as to who the settlement of outstanding fees was made to? and for what service provided? While i appreciate the issue of 431,589 shares is small, for me this is like "a red rag to a bull" given what was discussed at the AGM regarding dilution. Why so secretive? Is cash flow so tight we couldn't pay this in cash?

—-

Great username!

Yes, confirmed with APC that the issue of £26k in shares was to settle Stockdale fees. Reading between the lines, they are very supportive of the company and I’d envisage they preferred this option as it is probably advantageous in respect of tax liability. I may well be wrong on this count...last studied taxation 26yrs ago.

Also, Stockdale are being acquired by Shore Capital shortly hence probably tying up the account before the change in ownership.

Don’t think anything untoward re. cash.

Hope this assists.

Kind regards,
GHF

[playful] 22/3/2019 12:16

Energy saving LED upgrade brightens Arndale Shopping Centre

[budsman] 22/3/2019 10:52

PJ1 agreed on the dividend - let's focus on debt reduction.

Bud